Most business operations are established upon a reliable power supply making it paramount to maintain power systems and to ensure appropriate contingencies are in place to mitigate exposure to both operational and commercial risks. For sectors such as data centres, manufacturing, healthcare, hospitality and education, any issue surrounding unstable or failing energy supplies will undermine their critical operations and negatively impact brand reputation.

With ongoing pressures upon global power supplies, driven by factors such as increasing weather irregularity and ever-growing demand, having the appropriate power resilience infrastructure in place is more critical than ever.

However, according to research compiled by Centrica, nearly 75% of organisations are deemed to be underprepared for the growing threat of power supply interruption. This highlights that companies must invest further in this area as a priority and, in turn, demand for power resilience infrastructure is expected to grow in the short and medium term.

On top of this, the growth in two key end-markets - data-centres and renewable energy - is driving increased demand for power resilience infrastructure. Data centres are expected to grow at a CAGR of 9.9% over the next five years with the ongoing rise of cloud computing being supported by the rise of remote working and expansion of the ‘Internet of Things’. The renewable energy sector is also forecast to grow at a CAGR of 8.4% over the next five years, as governments continue to commit to sustainability requirements. This new infrastructure will require significant investment in resilience systems and also the equipment needed to regularly test these systems, such as load banks.

M&A is key to building scale and technical expertise

These dynamics are driving companies in the power management sectors to build scale, geographical reach, and broaden product portfolios in order to meet this demand. For example, Hubbell Inc have communicated that their intention is to ensure that their portfolio is strategically aligned to solve both critical infrastructure problems and energy efficiency requirements, and in turn further expand their leading positions in these markets.

We expect that M&A will prove to be a key tool in adding breadth and enabling groups to gain exposure to these high-growth end markets. This has been illustrated this year in power management giant Eaton’s acquisition of Tripp Lite, a provider of uninterruptible power supply systems and power distribution units, for $1.65 billion in January 2021, which expanded the power resilience area of the business and enabled the group to better service its data centre customers.

Hubbell Inc have also created a new business unit that focuses on Utility Protection and Control and have acquired Beckwith Electric this year to complement its existing product portfolio and expand its technology capabilities in this area.

As Industry 4.0 transformations continue to unfold, and the desire to harness more and more data to drive decision-making becomes a business priority in the boardroom, it seems that the power resilience sub-sector is set for a supercharged future.